Climate Change Levy (Hansard, 19 July 2001)

§ 1. Mr. David Amess (Southend, West)
What recent representations he has received on the climate change levy. [3320]

§ The Financial Secretary to the Treasury (Mr. Paul Boateng)
The Government received many representations over the two years of development of the climate change levy, and many of the ideas that businesses suggested are reflected in its final design.

§ Mr. Amess
I wholeheartedly congratulate the Chancellor of the Exchequer on his splendid news, although he has some way to go before he catches up with my wife and me.
How does the Financial Secretary intend to deal with the European Commission's ruling that dual fuel exemptions in the climate change levy constitute state aid, and the doubts that it has cast on the exemptions compatibility with environmental aid guidelines?

§ Mr. Boateng
Robustly. We are negotiating with the Commission, and the industry is involved in those negotiations, which are going well. We have a strong case, and we believe that our representations will be successful.

§ Mr. Tony Colman (Putney)
Has my right hon. Friend held any discussions on the climate change levy with United States Senator James Jefford, who is the new chairman of the Senate Environment Committee? He wants the United States Government to re-engage with the Kyoto protocol negotiations. He is interested in the success of the implementation of the climate change levy by US businesses in the United Kingdom in improving energy use, increasing investment and reducing costs. Does my right hon. Friend agree with Senator Jefford that, although emissions trading may be a long-term answer, we need a regulatory regime, such as the climate change levy, and to work with business to deal with greenhouse gases in the short and medium term?

§ Mr. Boateng
I have had no discussions with the Senator, although I would like to. There is good news 412 from the United States, where there is strong and growing support for Kyoto. There is every sign that President Bush understands the importance of the issue, although we have some disagreements about his approach to the Kyoto targets.
In introducing a package of measures on the climate change levy, we make the point that it is part of the answer, but that trading emissions also has a role to play. Our approach is balanced and retains a competitive edge for our industry while bearing down on carbon emissions.

§ Mr. Howard Flight (Arundel and South Downs)
I congratulate the Chancellor on his good news. Should his lot be the same as mine, with four children to bring up, it will have a profound impact on his tax thinking in future.
Hon. Members know that there will be a windfall VAT gain of at least £30 million from the VAT levied on the total amount of energy bills, including the misguided climate change levy element. Will the Financial Secretary confirm that the wind fill will not be recycled to business through the cut to employers national insurance?

§ Mr. Boateng
Windfall. The hon. Gentleman knows that Customs and Excise is considering the points that he made. When it has reached a decision on the advice it will tender to Ministers, I shall write to him about it. He makes an important point, but I stress that the climate change levy improves the competitiveness of industry because we have introduced a generous system of rebates and we are also providing support through national insurance employers contributions. That is good news, which is widely welcomed by industry, if not by Conservative Members.